In October 2017, the Government passed legislation reforming Australia’s media ownership regulation, repealing the “75% reach” and “2 out of 3” rules (see our article on that legislation here). Given opposition to the reforms from the Australian Labor Party and the Greens, the Government was only able to shepherd that legislation through the Senate with the support of the minor parties and the independents.

The two minor parties extracted a number of concessions from the Government in return for supporting the media reform legislation. One of the concessions obtained by Senator Nick Xenophon’s party was a requirement that the Government direct the Australian Competition and Consumer Commission (ACCC) to undertake an investigation into the activities of Google and Facebook. At the time, very little detail was provided as to the scope or type of investigation, other than that it would commence by 1 December 2017.

Terms of reference announced

lthough a little late, the terms of the inquiry were publicly announced on 4 December 2017. The investigation will be a public inquiry under section 95H of the Competition and Consumer Act 2010 (Cth) (CCA).

The terms of reference do not mention Google and Facebook by name. Instead, the terms of reference require the ACCC to hold an inquiry into the impact of digital search engines, social media platforms and other aggregation platforms on the state of competition in Australia’s media and advertising markets. The ACCC is to give particular consideration to the impact of those platform services on the supply of news content and the impacts on stakeholders – including content creators, advertisers and consumers.

What will the inquiry involve?

Avid followers of the activities of the ACCC will know that the section 95H inquiry process is a well-worn path. In fact, the ACCC is currently undertaking five other inquiries under that section, including in relation to the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry.

The steps for the inquiry, as announced by the Government and the ACCC, are as follows:

  • An issues paper will be released “soon”. Given the recent holiday season, it would seem most likely that this paper will not be released until at least late January 2018
  • Public and private hearings will be held during the course of 2018
  • A draft report will be released for comment in early December 2018
  • Further consultation will occur after the draft report is issued
  • The final report will be issued by June 2019.

Importantly, the ACCC has the ability, in undertaking an inquiry under section 95H, to use compulsory information gathering powers under the CCA. These compulsory powers may need to be used if any relevant stakeholders prove reluctant to provide the information the ACCC believes it needs to carry out the inquiry.

Where to from here?

In undertaking the inquiry the ACCC has been directed to take into consideration a number of issues, including:

  • how platform service providers are exercising market power in their dealings with news content creators and advertisers
  • the impact of platform service providers on the variety and quality of news available to consumers
  • how these providers are impacting media and advertising markets now and also how longer term trends will impact competition in those markets
  • the impact information asymmetry is having on different participants in media and advertising markets.

In commenting on the inquiry and the issues that it will consider, the ACCC Chair, Mr Rod Sims, said that the ACCC will have an open mind and will listen to the views of all stakeholders. However, given (as acknowledged by Mr Sims) that the share of advertising spending in the traditional media sector has declined significantly over recent years, thereby negatively impacting the ability of the traditional media sector to fund the creation of quality journalist content, it would be expected that the inquiry will look very closely at the ongoing sustainability of the traditional media sector and whether some form of market intervention by the Government is appropriate.

The likely approach of the ACCC, and its initial areas of focus, will become clearer when the ACCC releases its issues paper for the inquiry. We will provide further briefings as the inquiry progresses.